Severance Indemnity of Employee Working Part-time on Time-Credit Basis

On 10 November 2011 the Constitutional Court ruled twice that the severance indemnity of an employee who reduced her/his working hours in the system of time-credit has to be calculated on the basis of the part time salary rather than the full-time salary which the employee had earned before starting to work part-time. The two judgments thus confirm what is now becoming established case-law before all Belgian courts (See, Van Bael & Bellis on Belgian Business Law Newsletter, Volume 2009, No. 10, p.12, available at www.vbb.com).

Collective bargaining agreement No. 77bis (“CBA No. 77bis”) allows employees to work part-time for a fixed period, with the option to return to full-time work after this period. This is referred to as the system of time-credit (tijdskrediet/crédit-temps). When an employee who has reduced his working hours under CBA No. 77bis is dismissed for reasons relating to the time-credit, she/he is entitled to (i) either a notice period or an indemnity in lieu of notice; and (ii) a so-called protection indemnity.

Article 103 of the Law of 22 January 1985 containing Social Measures provides that, for the purpose of determining the length of the notice period, account must be taken of the fictitious full-time employment. With regard to both the severance and protection indemnity, however, previous case-law of the Constitutional Court had clarified that account must be taken of the employee’s actual reduced salary rather than the fictitious full-time salary (judgments of 13 March 2008 and 8 May 2008 – for a discussion of the first judgment, see Van Bael & Bellis on Belgian Business Law Newsletter, Volume 2008, No. 3, p. 7, available at www.vbb.com).

In a judgment of 22 October 2009, the Court of Justice of the European Union (“ECJ”) held that pursuant to Council Directive 96/34/EC of 3 June 1996 on the framework agreement on parental leave (“Parental Leave Directive”), an employee dismissed while on parental leave is entitled to compensation on the basis of the full-time salary rather than the reduced salary. Employees then brought a new discrimination claim before the Constitutional Court as they considered it discriminatory that an employee reducing his or her employment in the framework of parental leave receives an indemnity on the basis of the previous full-time employment, while the employee reducing his or her employment in the framework of time-credit is entitled to an indemnity on the basis of his part-time employment.

In the first case of 10 November 2011, the Constitutional Court dismissed this discrimination claim. According to the Court, while implementing the system of time-credit, Parliament was not obliged to calculate the notice indemnity and the protection indemnity on the basis of full-time salary. The system of time-credit would be discriminatory and illegal only if the difference between the calculation of the indemnities and the notice periods was manifestly unreasonable. Moreover, the judgment of 22 October 2009 of the ECJ had to be seen in the specific framework of the Parental Leave Directive, and has no bearing on the system of time-credit.

In the second case of 10 November 2011, the Constitutional Court added that the circumstance that a system of time-credit starts after the age of fifty and can last until the retirement age, does not change the above conclusion. Moreover, for people above the age of fifty, there is no discrimination on the basis of age, as the system of reduced indemnity also applies to younger people.

The Constitutional Court thus continues the course set in its earlier case-law. There is still a case pending before the Constitutional Court regarding palliative care leave, but the Court is expected to follow the same reasoning as that which it applied in the cases of 10 November 2011.